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in Millbrae, CA
Millbrae investors have two powerful financing tools for rental properties and rehab projects. DSCR loans and hard money loans serve different purposes in your real estate strategy.
Understanding the differences between these investor-focused products helps you choose the right financing for your San Mateo County property goals. Each loan type has distinct advantages depending on your timeline and project type.
DSCR loans qualify you based on your rental property's cash flow rather than your W-2 income. The property must generate enough rent to cover the mortgage payment, typically with a debt service coverage ratio of 1.0 or higher.
These loans work for long-term rental investments in Millbrae. You get traditional 30-year terms with fixed or adjustable rates, making them suitable for buy-and-hold strategies.
Down payments typically range from 15% to 25% depending on your credit score and the property's rental income. Rates vary by borrower profile and market conditions but are generally higher than conventional loans.
Hard money loans focus on the property's value rather than your financials. Lenders care most about the after-repair value and your exit strategy for the Millbrae property.
These short-term loans typically last 6 to 24 months. Investors use them for fix-and-flip projects, major renovations, or bridge financing when speed matters more than cost.
Expect higher interest rates and fees compared to DSCR loans. Down payments often range from 20% to 35%, but approval can happen in days instead of weeks.
The main difference is timeline and purpose. DSCR loans are long-term financing for rental properties that already generate income. Hard money loans are short-term tools for acquisitions and renovations.
Cost structures differ significantly. DSCR loans offer lower rates but require the property to cash flow. Hard money loans cost more but provide faster access to capital without income requirements.
Exit strategies also vary. DSCR loans are your permanent financing. Hard money loans require refinancing into traditional financing or selling the property within the loan term.
Choose DSCR loans when buying a Millbrae rental property you plan to hold long-term. The property should already have tenants or be rent-ready to qualify based on cash flow.
Pick hard money loans for fix-and-flip projects or when you need to close quickly on a San Mateo County investment. This works when renovations will significantly increase the property value.
Some investors use both strategically. They start with hard money to acquire and renovate, then refinance into a DSCR loan for long-term rental income.
DSCR loans require the property to generate rental income immediately. If major repairs are needed, start with hard money financing, complete the renovations, then refinance into a DSCR loan once tenants are in place.
Hard money loans typically close in 5-10 business days. DSCR loans take 3-4 weeks because lenders verify rental income through appraisals and market rent analysis.
DSCR loans generally need credit scores of 640 or higher. Hard money lenders focus less on credit and more on the property's value and your experience, though better credit helps with terms.
Yes, both DSCR and hard money loans are available throughout San Mateo County. Local lenders understand the Millbrae market and can structure either option for your investment property.